Higher metal prices help FTSE index to rebound from two-month low

FTSE: 5,858.41 (+22.352) Mid-250: 11,858.76 (+63.09) Small Cap: 3,242.29 (+19.26):UK STOCKS rose yesterday, with the benchmark FTSE 100 Index rebounding from a two-month low, as higher metal prices boosted raw-material companies, overshadowing Moody's Investors Service's downgrade of 14 banks' debt outlook.

Anglo American and Kazakhmys rose as copper surged in London. Cable and Wireless Worldwide rallied 4.9 per cent after earnings beat estimates.

The FTSE 100 advanced 0.4 per cent, at the close in London and the FTSE All-Share Index gained 0.4 per cent.

The FTSE 100 has declined 0.7 per cent this year, dragging its valuation to 10.3 times the estimated earnings of its companies. That is near the cheapest since July last year.

Anglo American advanced 1.5 per cent to 2,873.5 pence and Kazakhmys rose 2.3 per cent to 1,235 pence. Copper, nickel and tin rallied on the London Metal Exchange.

Cable and Wireless rallied 4.9 per cent to 52.1 pence. The London-based provider of telecommunications services reported full-year earnings and sales that beat analyst estimates and predicted free cash flow will grow this year.

Cairn Energy climbed 4 per cent to 435.8 pence after announcing plans to drill as many as four wells off Greenland at a cost of $600 million.

Mitie Group surged 5.2 per cent to 231.9 pence, its second day of gains. The company yesterday reported results that showed “an encouraging pick-up in organic growth”, according to a report from UBS AG analyst Alex Hugh, who raised his price estimate on the shares by 7.7 per cent to 280 pence.

Royal Bank of Scotland Group analyst Kean Marden wrote in a report yesterday that the company’s organic sales growth guidance may be “conservative”.

Marks and Spencer slid 2.9 per cent to 385.6 pence. The UK’s largest clothing retailer said the economic outlook remained challenging as it reported 13 per cent growth in profit.

Lloyds Banking Group and Royal Bank of Scotland are among 14 UK lenders whose debt Moody’s is considering downgrading as withdrawal of government support may increase credit risk.

Lloyds slid 2.2 per cent to 49.74 pence while RBS lost 1.1 per cent to 40.44 pence. Barclays dropped 1 per cent to 265.6 pence and HSBC Holdings slipped 0.5 per cent to 623.5 pence. – (Bloomberg)